Good morning, and welcome to the B. Riley Financial Preliminary Fourth Quarter Earnings Results Conference Call. My name is Tom, and I will be your call coordinator. Earlier today, B. Riley issued a press release announcing our preliminary results for the fourth quarter of 2024, which can be found on its Investor Relations website at ir.brileyfin.com. Today's call includes prepared remarks from the company followed by a question-and-answer session. Joining us today from B. Riley are Bryant Riley, Chairman, Co-Founder and Co-CEO; Tom Kelleher, Co-Founder and Co-CEO; and Phillip Ahn, CFO and COO. As a reminder, this call is being recorded, and an audio replay will be available on the company's Investor Relations website later today. Today's call will also include non-GAAP measures. The reconciliations for these as well as an explanation for the use of these metrics and the definition of these terms is available in the press release, which is available on the company's Investor Relations website. And before we conclude today's call, I will provide the necessary cautions regarding forward-looking statements. Now I will turn the call over to Mr. Bryant Riley. Mr. Ryan, please proceed.

Thank you, and good afternoon, everyone, on today's call. We appreciate everyone joining us. I want to start by expressing my appreciation for your patience, as we work towards becoming current with our financials and regain NASDAQ Listing Compliance. And while we still need to finalize our fourth quarter results and file our Annual Report for 2024, we wanted to provide investors with a brief update as to where things currently stand and our priorities for the year. Given the substantial number of strategic initiatives we've undertaken, including several transactions, we thought it would be helpful to start with a recap of the actions we've taken since the start of the fourth quarter and an overview of where our business is today. The common thread across all of these actions is our responsiveness to the challenges created by certain principal investments. These losses have been recognized, and while there is still work to do, we are moving forward with a stronger balance sheet and capacity to reinvest in our core businesses. Let me touch on a few notable developments. First, we established a joint venture with Oaktree Capital Management for great American Group. Under the terms of this transaction, we contributed all of the interest on B. Riley's appraisal and valuation services, retail, wholesale and industrial solutions and real estate advisory businesses to a new holding company. At closing, B. Riley received total consideration consisting of approximately $203 million in cash plus ownership interest amounting to approximately 44% of the company. In effect, we sold a majority stake in these businesses, which provided substantial capital to meaningfully delever our balance sheet, while still retaining significant equity upside in a business with compelling growth prospects. Critical to our thinking with this transaction is there are now 2 firms with the vested…

Thanks, Bryant. As you saw in our press release, we released preliminary estimates of financial results for the fourth quarter ending December 31, 2024. As a reminder, these numbers are unaudited and subject to change. For the fourth quarter, we expect to report net income available to common shareholders of $48 million to $68 million, which includes approximately $236 million to $247 million of income from discontinued operations, primarily related to the divestiture of a majority interest in the Great American businesses. Diluted net income per share -- per common share is expected to be $1.57 to $2.22 per share and net loss from continuing operations of $178 million to $187 million. This net loss is primarily impacted by estimated impairment charges of goodwill and intangible assets of $73 million to $79 million and $49 million of trading losses and realized and unrealized losses on investments. Additionally, we expect operating adjusted EBITDA from continuing operations to be $12 million to $14 million. As of the end of December 31, 2024, we had cash, cash equivalents and restricted cash of approximately $257 million, which included approximately $156 million of cash and cash equivalents and $101 million of restricted cash primarily reserved for the redemption of the company's February 2025 senior notes. We had total debt of $1.78 billion as of December 31, 2024, and total debt, net of cash and investments of approximately $991 million. Notably, this represented a decline of $221 million from the third quarter. And finally, I'd note that as an accelerated filer, our deadline for filing our 10-K this year is March 17. If we are unable to file the 10-K at that time, we would expect to file a Form 12b-25 with the SEC to receive a 15-day extension. After we file the 10-K, we expect to resume our normal quarterly filing cadence. With that, I'll turn the call back to the operator for Q&A.

Thank you Team. Ladies and gentlemen at this time we’ll conduct the question-and-answer session. [Operator Instructions] Our first question comes from Amer with Imperial Capital. Your line is open.

Thank you. Good evening. Thank you for the detailed summary of the transactions that you have accomplished. My question is, can you give us a sense of what you intend to accomplish in the next six months to sort of beef up liquidity and the balance sheet?

So I would say to you that our strategies are fluid with the exception of one, which is that this is, as I said in the press release, the demarcation line of past and present and near past and near present. And so our focus -- our complete focus is on investing in our business, investing in our broker-dealer and our wealth management and our advisory business and to grow. I recognize that we have a fair amount of baby bonds out there. You know the maturities of them. We will proactively work to make sure that our balance sheet is aligned. I think we made a lot of progress in the last 12 months. But I don't know if you know we owned Atlantic Recycling. But as you can see today, we sold that for $70 million. We will continue to be opportunistic across that with the key focus of investing in our business.

Got it. Can you talk a little bit about your core business, you basically mentioned that it's the BRS business, the Wealth Management and Advisory. Can you give us some sense of how to think about it on a run rate basis or what kind of -- what I'm trying to understand is where potentially EBITDA or whether these businesses will be free cash flow positive for either the next quarter or for the full year 2025?

Sure. I think the best way to look at it is go back and look at '21, '22 and '23. The only thing we don't have from our core business, and it wasn't core, but it generated $40 million of EBITDA was our brands business. We sold 57% of our Great American business, but we have been greatly -- as we expected, there has been other opportunities with that joint venture that may work to replace some of that direct cash flow. I mentioned on the call the direct equity investment in JOANN as an example and other -- some other lending opportunities. So our balance sheet, our cash balance sheet and our ability to invest in debt is smaller, but the wealth management business is a little smaller. Our broker-dealer has been with us for 27 years. Our telecom business is consistent and steady, and you can look at the historical EBITDA there. GlassRatner had a record year this year. So I think if you look at it, there are certainly -- we are certainly a smaller company than we were. We have utilized a lot of dollars to run tire debt, the principal investments that hit us have hit us. But as I look at the overall core operating portfolio, we still feel really excited about the operating EBITDA potential there. I'm not going to get into the numbers, but I'm happy to walk you through what we've done in the past or you can walk through, I think we've been pretty detailed in our Investor Day, and you can see the businesses that we have. And we now have to go after it. And we need to make sure that our -- all of our work and all of my work and everybody here work is to generate opportunities, revenue and get back on track on the operating side of the business.

Sure. Maybe if I can sneak in 1 more, and then I'll get back in the queue. You have a pretty asset-rich balance sheet. Still, you mentioned you have GlassRatner, you have the telecom businesses, targets. Can you talk about what you think or how we should think about the value of those businesses and the EBITDA generation potential. If you can just shed some light on that.

So again, I'm not going to speculate on multiples. Firstly, secondly, the operating businesses that we have at this time might be different than a year from now or a year ago. Our focus is on investing in those operating businesses and growing those operating businesses and going back to where we were without the noise and the distraction of some ill-timed investments. And so I appreciate that the goal is to kind of walk through a sum of the parts. But I think right now, based on where we are, which is not a normalized environment, still. Having said that, staying profitable on our wealth management business still generating meaningful EBITDA at the broker-dealer, having a record year of GlassRatner, having a record year at Great American Telecom is still doing its thing. I think that we have an unbelievable base and group to build on. We've taken some hits. I readily acknowledge that. But I think it's our job to make sure that our clients or companies that we work with understand that this is the same B. Riley Financial that was -- that they were working with before and that we are getting our financials current and it's go time for us. And so -- that's how I would answer that.

Okay. Can I sneak 1 more in, actually.

Sneak.

Okay. Sure. So you guys recently refiled the Nomura facility. You have the Oaktree facility in place now. As cash comes in, for instance, from this the sale that you announced and whatever cash is on the balance sheet. Do you guys have the ability to buy back debt under this new credit agreement?

No. The senior facility, they are clearly, I think most senior facilities and not all, but at this point, we do not have the ability to buy bonds in the open market.

Understood, I’ll get back in the queue.

Thank you for your questions.

Thank you Amer. Our next question comes from Sean. Sean, your line is open.

Hi, Bryant. It’s Sean Hayden. How are you?

I'm good. We are here. We are -- it's good to hear from you.

Yes. Yes. It's been a little while. So a quick question for you on wealth. What does that business look like now? I'm just trying to get a sense of the kind of proportionality of the business you sold and what you held on to.

The vast majority were W-2 employees. So I think I outlined the numbers in my presentation the remaining wealth management group. But just to put it in perspective, assets under management before these sales and some attrition was closer to $24 billion and now it's closer to $15 billion. So that should give you some perspective.

Got it. Okay. Yes, that's helpful. And then just as far as further asset monetization. Is it safe to say most of that will be coming from the Principal Investment Group going forward?

Well, look, I think we've been really -- I've been careful or intentional about monetizing what I would call non-core assets. And I will tell you that the day we sold brands at the price we sold brands was a tough day, but we had to make decisions particularly at that time based on where that money can be recirculated and how it can be used. And if you are selling something for $1 and you can get $2 back in some way, shape or form, then that is the decision you have to make. I don't think we're in that position now. We can be selective and thoughtful. It doesn't mean that I'm not recognizing that we have maturities in '26 and '28, but we need to grow our businesses and get back to where we were. And yes, focus on things that are -- continue to focus on things that do not disrupt that.

Got it. All right. Well, that's all for me. And Best of luck with everything. Thanks.

I appreciate it. Thank you.

Thank you Sean. [Operator Instructions] It appears there are currently no further questions. Handing it back to Bryant Riley for any final remarks.

All right. Well, thank you. In closing, I want to again thank all our employees, shareholders and partners for their patience and support and seeing through what has been a difficult period for our firm. I want to reinforce that the fourth quarter represented an important strategic line of demarcation, one of which our noncore principal investments have largely been monetized or written down, allowing us to focus on what we've done best for 28 years, being the go-to partner for small cap companies and those who invest in them. While we still have work to do, I am excited to turn the corner, and I look forward to announcing more of our plans in the near future. Thank you.

Thank you, team. Ladies and gentlemen, before we conclude today's call to provide B. Riley's financial Safe Harbor statement, which includes important cautions regarding forward-looking statements made during this call. Statements made during this call that are not descriptions of historical facts are forward-looking statements that are based on management's current expectations and assumptions and are subject to risks and uncertainties. If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition and stock price could be materially negatively affected. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to us and speak only as of today's date. Such forward-looking statements include, but are not limited to, those regarding the expected growth and recovery of our business segments, our efforts to monetize noncore assets and the review of our operating and capital structure. Factors that could cause such actual results to differ materially from those contemplated or implied by such forward-looking statements include, without limitation, the risks described from time to time in B. Riley Financial, Inc.'s periodic filings with the SEC, including, without limitation, the risks described in B. Riley's Financial Inc.'s Annual Report on Form 10-K for the year ended December 31, 2023, under the captions Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations. Additional information will be set forth in B. Riley Financial's Quarterly Report on Form 10-Q for the three-month period ended September 30, 2024. These factors should be considered carefully, and participants are cautioned not to place undue reliance on such forward-looking statements. All information is current as of today's call, and B. Riley Financial undertakes no duty to update this information. Thank you for joining us for today's call. You may now disconnect.